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Midterm

MGTA01H3 Study Guide - Midterm Guide: Monopolistic Competition, Tim Hortons, Perfect Competition


Department
Management (MGT)
Course Code
MGTA01H3
Professor
mcckoncey
Study Guide
Midterm

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University Of Toronto at Scarborough
MGTA03 - Introduction to Management I
Mid-Term Test March 12, 2011
MULTIPLE CHOICE QUESTIONS BOOK VERSION 1
Family Given
Name Name
(Please print NEATLY)
Student Number
INSTRUCTIONS
1. On the SCANTRON answer sheet:
PRINT your family name,
PRINT your given name
PRINT your student number
2. On the SCANTRON answer sheet
fill in all the appropriate bubbles corresponding to your name,
fill in all the appropriate bubbles corresponding to your student number
3. Instructions 1 and 2 (above) are an integral part of the examination. Failure to
comply with these simple instructions causes additional work, delay and
confusion. If you fail to complete the relevant sections of the SCANTRON sheet correctly
and fully, you will have 5 marks deducted from your grade on this exam!
4. When recording your answers on the SCANTRON sheet, make sure you:
a) Use a pencil
b) Fill in the SCANTRON bubbles neatly and completely
c) Erase any changes as completely as possible
d) Be very careful to place each answer in the correct space
5. You have 90 minutes to write the exam.
This booklet consists of 44 multiple-choice questions.

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MGTA03 Midterm Test March 12, 2011
Version 1 Page 2 of 11
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers
the question.
1) What is the version of the exam you are writing? (Correct Answer is A)
a) Version 1
b) Version 2
2) Which one of the following is not a characteristic of an oligopoly?
a) great product differentiation
b) prices differ greatly
c) few sellers
d) many buyers
3) Of the following, which is a way in which monopolistic competition differs from perfect
competition?
a) There are more sellers in a market characterized by monopolistic competition.
b) It is easier for sellers to enter a market/industry characterized by monopolistic
competition.
c) In a market characterized by monopolistic competition, a few firms have some control
over price.
d) None of the above.
4) Entrepreneurs are important because they:
a) provide all of the capital to start new businesses
b) assemble and organise the resources to start new businesses
c) both a and b are true.
d) neither a nor b is true.
5) The price of cooking oil rises 5%. Tim Hortons then raises the price of its donuts by 9%. At the
same time, the Highland Creek Bakery raises the price of its donuts by 5%. This kind of pricing
strategy would suggest these businesses are engaged in:
a) perfect competition
b) a monopoly
c) an oligopoly
d) monopolistic competition

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MGTA03 Midterm Test March 12, 2011
Version 1 Page 3 of 11
6) Labour includes:
a) all the workers involved with the business
b) only workers who do work directly to product or service
c) only people who are not managers
d) only employees who must be paid
7) When is an industry likely to be dominated by small business firms?
a) where a lot of resources are needed
b) where few resources are needed
c) where machine, materials, employees, and money are needed
d) where considerable resources, a distribution network, and advertising are needed
8) Mario's Pizzeria sells only two kind of pizza: plain and all-dressed. Last year, Mario's Pizzeria
sold 2,000 all-dressed pizzas, selling them for $10 each. Mario's sold 10,000 plain pizzas at $5
each. The cost of the ingredients, the box, and all of the electricity and utilities to make the
pizzas came to $20,000. In addition, Mario paid $10,000 rent for the store. Finally, Mario paid a
total of $10,000 to a couple of students who worked part time, helping out on busy Friday and
Saturday nights. Mario paid himself no salary, but took home all of the profits. Last year, Mario
made a profit of
a) $40,000
b) $30,000
c) $60,000
d) loss of -$10,000
9) This year, Mario Pizzeria decided to reduce the price of its all dressed pizza from $10 down to
$8. Mario thought that this might increase the volume of sales. He was correct. The lower
price increased demand for all-dressed pizzas from 2,000 to 3,000 during the year. The extra
pizzas meant that Mario spent an additional $2,000 to make the additional pizzas. His rent and
the cost of employing the two part time workers did not change. Since Mario lives off of the
profit from his business, the decision to lower the price of his pizzas was:
a) a good idea the business made a larger profit.
b) a bad idea the business made a lower profit.
c) neither a good nor bad idea the profit stayed the same.
d) we don't have enough information to know.
10) Which of the following is not a characteristic of a typical entrepreneur?
a) Preference for taking risks.
b) Desire for responsibility.
c) Desire for immediate feedback.
d) Confidence in their ability to succeed.
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